Can grandparents open a 529? (Script)

Question

Can grandparents open a 529? Watch video

Answer

In some families, grandparents are an important source for helping to fund a grandchild's college education. And even when grandparents don't have a lot of extra money, they may still wish to make small gifts towards a grandchild's college fund. 529 plans can be very attractive vehicles for grandparents. One way to go about it is for the grandparents to set up and maintain the account themselves, naming a grandchild as beneficiary. The grandparents can then later on change the beneficiary to another grandchild, including the original beneficiary's first cousin, if they decide they would like to do that. Another way for grandparents to help is by simply making contributions to the 529 plan set up by their grandchild's parents. This way they do not have to keep track of the account themselves, but they also lose the ability to make changes to it in the future. Grandparents must keep gift taxes and financial aid considerations in mind whenever they intend to make education-related gifts because those rules can get a bit tricky when the amount involved is significant. Please visit savingforcollege.com for more details about those issues.